How It Reaches the Economy
The Same Rise, Nine Times the Pain
The ECB sets one rate for twenty countries whose mortgage markets transmit it at wildly different speeds. This is not a design flaw anyone forgot about.
12 min155 XP available4 challenges
A borrower on a floating rate feels the whole increase almost immediately. A borrower on a thirty-year fixed rate feels none of it — they only feel it if they move or refinance. Everything between is a matter of how many fixed deals expire this year. Multiply the share that reaches households by how much they owe relative to income, and you have the amount of spending power a decision removes.
Household income absorbed
7.04%
Spending power removed within the year
- Share of borrowers reached
- 88%
Floating, plus fixed deals resetting
About 85% in Portugal, under 5% in the United States
Take more than 7% of household income out of the economy in a single year
- Try 0% — not yet
- Try 100% — not yet
- Take more than 7% of household income out of the economy in a single year — done
Answer to continue.